Goods and Services Tax (GST) regime will restrict tax collected at source (TCS) for e-commerce portals at 1%, fixed. This means that GST won’t increase TCS for e-commerce portals in future, and whatever is the amount of transaction, the tax would be only 1%.

This comes as a huge relief for major e-commerce portals like Amazon and Flipkart, which has been fighting with the GST Council to remove the very concept of TCS. Now, as the TCS has been restricted to 1%, this means that e-commerce portals will need to shell out less money, and their profits can now be maintained.

A senior Govt. official has confirmed, as he said, “The (GST) council has decided to provide for up to 1 per cent TCS..”

As per the schedule, GST Council has now approved the central GST (CGST) and integrated GST (IGST) laws, which shall be introduced in the Parliament as of March 8th, when the second half of Budget session starts.

GST & Ecommerce: Bitter-Sweet Relationship

Tax related issues pertaining to e-commerce sales have always been a bone of contention for both Govt. and digital entrepreneurs.

When states of UP, Bihar, MP, Gujarat, Karnataka and others started imposing special taxes for e-commerce sales, then Internet companies united in their opposition, and called for fast implementation of GST so that such myriad, unnecessary taxes are done with, permanently.

Tax Collected at Source or TCS was one of the primary objections of the e-commerce industry, when it came to GST implementation; and the reason was that, this TCS needs to be collected by the commerce portals, rather than sellers and customers. This meant not only more expensive products but also substantial investment of time and resources to track millions of transactions which happen online.

By capping TCS to 1%, there is certainly a big relief for e-commerce portals, but the matter hasn’t closed yet. Ideally, e-commerce portals would want a complete abolition of TCS under GST, but until that happens, they will need to be satisfied with this current update.

Mohul keenly observes the nuances of Indian startup world; and tries to demystify the secrets behind Technology, Marketing, Mobile and Internet. He is a Writer by passion, Marketer by choice and Entrepreneur by compulsion. Follow him on Twitter here: @_mohul